Figured out the issue.
The backup was located in /data/backup/restore but I used target-dir=/data/backup/ when decompressing/preparing. So there were .qp files in the database folders so when attempting to start Mysql it gave this error.
I would recommend that target-dir has more error checking to confirm its the right folder, as I have seen others get confused thinking its where files will be decompressed to (instead of location of the backup) and in my case I accidentally used 1 directory up but it didn’t throw an error because it went inside the folder and decompressed .qp files in /data/backup/restore but not /data/backup/restore/mysql/ and other databases.